Institutional adoption of crypto assets has shown improvement in recent months due to a constant reduction in barriers like security issues and immature market infrastructure. But, the institutions are worried about the insufficient market capitalization of cryptocurrencies.
The advisory firm, Aite Group published the report in partnership with eToroX, the report says that 5 key factors can play an important role in institutional market adoption of crypto assets. The areas include market structure, security and custody, technological innovation, the role of credit and market liquidity.
The report states that smooth access to credit in the crypto market is necessary for wider institutional adoption. A total of 25 market respondents outlined the importance of price transparency and ease of market access.
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“Obstacles to institutional adoption still exist, but these barriers are gradually coming down thanks in large part to innovative crypto-native market participants that have risked the survival of their business on the initial growth of the institutional crypto asset market. The final wave of growth must be led by the traditional institutional market participants and driven by increasing regulatory clarity, improved market infrastructure and cutting-edge technology,” the official report states.
Institutional Crypto Adoption
The report mentioned several challenges institutions are facing in crypto adoption. Despite some issues, major financial firms started accumulating Bitcoin and other crypto assets in 2020. Finance Magnates reported about $100 million Bitcoin purchase by MassMutual. Moreover, several Wall Street firms showed interest in Bitcoin last year. Grayscale, the world’s largest crypto asset management firm pointed out in the latest quarterly report that more than 90% of their demand is coming from institutions. But, the institutional adoption in crypto is nothing in comparison to traditional stocks and commodities like gold. Institutions are still worried about uncertain market regulations and potential manipulation in cryptocurrencies.
Bitcoin is down nearly 15% this week as the world’s largest cryptocurrency dipped below $32,000 on Thursday. The total market cap of crypto assets stands at around $940 billion.